1. What Is the Texas Tax ID?
2. How Is the Texas Tax ID Used?
3. How Do You Apply for an EIN?
4. Using Your Federal EIN To Get Your State Tax Identification Number

Updated October 22, 2020:

What Is the Texas Tax ID?

A Texas Tax ID number is assigned by the state's comptroller or franchise tax board. The federal Employer Identification Number (EIN) is a nine-digit number issued to a business or company by the IRS. As part of the application process for getting your Texas Tax ID, you must be able to provide the federal EIN. Although it is an Employer Identification Number, it does not mean that you must have employees. 

If you are a sole proprietor, your Social Security Number serves the same purpose as the EIN for the sales and use tax permit application. There is a distinct differentiation between the two sets of numbers, even though they both have the same amount of digits. The EIN begins with two numbers, followed by a hyphen, then the remaining seven numbers. 

How Is the Texas Tax ID Used?

Your LLC can do all, but not limited, to the following with an EIN:

  • File your business's taxes 
  • Open investment, savings, or business checking accounts 
  • Handle employee payroll, if you have workers employed 
  • Get credit cards under the name of your LLC 
  • Obtain commercial lines of credit for business loans 
  • Apply for industry-specific business licenses

When financial and banking institutions act as lenders for transactions, they conduct a search for confirmation of your business as a legitimate entity in Texas. If a lender is unable to identify your sales tax permit or Texas Tax ID, not only will you be unqualified for a loan, but you might also be prohibited from opening a business checking account. 

An Employer Identification Number is also necessary to obtain any permits for sales required by your business demands, as well as to render additional franchise tax payments to the state of Texas. You must have approval for your LLC by the state before applying for your EIN to eliminate the possibility of having an EIN issued to the incorrect LLC.

How Do You Apply for an EIN?

There is no filing fee associated with an application for an Employer Identification Number from the IRS. There are three options to choose from when ready to apply:

  • Fax 
  • Mail 
  • Online

If you want to receive your EIN quickly and easily, the best choice is to complete the online form. By mail, it could take up to four weeks for processing, while faxing the application can delay your EIN assignment by four days. 

To complete the online form, you are required to answer some questions to identify your firm as a business entity to the IRS for tax purposes. After which, you can save, download, and print out your EIN, along with a confirmation letter. 

The most important information you will need before completing the online process is:

  •  Social Security Numbers of all the LLC members if you and any other members are U.S. citizens 
  • Individual Taxpayer Identification Numbers (ITINs) if you or other members are foreign nationals

If the latter and you do not have an Individual Taxpayer Identification Number, you must first obtain an ITIN before you can apply with the IRS for an EIN. You can do so by calling the IRS at 800-829-4933. Also, you can find additional contact numbers for the Internal Revenue Service by navigating online to https://www.irs.gov/help/telephone-assistance.

There is not much difference between the application questions and information required if you are a Single-Member LLC or Multi-Member LLC. Also, the state where your LLC originated does not alter the online form significantly because it is a federal process, which is not state-specific. 

Using Your Federal EIN To Get Your State Tax Identification Number

The Texas Tax ID is a unique number assigned to businesses by the state. If you do not have your EIN, you can still apply for a Texas sales and use tax permit. Until you receive your federal Employer Identification Number, the comptroller's office will only be able to issue a license with a temporary number. Only after you have obtained your EIN from the IRS can you follow up with the state franchise tax board to get your Texas Tax ID and get your business in operation properly. 

If you need help with your Texas Tax ID, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.